Rebooting the budget process

Before the most recent budget impasse, SAFE went out on a limb and predicted what would happen. The omnibus appropriation bill would be made available at the proverbial last minute. In addition to confirming the spending blowout that had previously been approved in principle, the OAB would include some “riders” (side proposals) – although none so controversial as to endanger congressional passage. This massive package would be enacted into law without substantive debate, thereby averting a government shutdown and allowing the members of Congress to leave town on schedule for a 2-week recess. DC braces for another legislative deadline, 3/19/18.How did we know all this? The pattern involved had been repeated so often that it was basically “old hat.” Imagine the consternation in the Nation’s Capital, therefore, when tweets surfaced that the president was displeased with the OAB and might veto it. Stay tuned for his remarks at 2:00 PM on March 23!

Perhaps the president’s goal was to dramatize his complaints about “this ridiculous situation that took place over the last week.” He had signed this bill, it was a matter of national security to restore the unwise cuts that had been made in the defense budget under the previous administration, but all concerned should be clear that he wasn’t ever going to sign another bill like it. The president’s statement on the omnibus spending bill, transcript, vox.com, 3/23/18.

There are some things we should have in the bill. But I say to Congress, I will never sign another bill like this again. I’m not going to do it again. Nobody read it. It’s only hours old. Some people don’t even know -- it’s $1.3 trillion.

As for what specifically had gone wrong, the president offered the following observations: (1) Democrats had held the defense budget hostage to demand spending increases in other areas, with the upshot being a lot of non-defense waste in the OAB; (2) It would take far more than $1.6 billion to build the border wall that was needed; (3) Democrats had failed to come to terms on a legislative replacement for the Deferred Action for Childhood Arrivals (DACA) program, so the failure of the OAB to address this matter was their fault; and (4) It was high time for the Senate to abolish its filibuster rule and Congress should give the president a line item veto for spending bills. Transcript, op. cit.

Notwithstanding references to waste in the OAB and the $1.3 trillion (for one year) price tag, the president didn’t criticize the overall amount of spending being authorized. His basic thrust was to question the allocation of the total amount among specific units/programs of the government.

Some observers saw the president’s last-minute veto threat as an effort to disclaim responsibility for deficiencies of the OAB – which was under fire from conservatives – by acting as though congressional leaders had played him. Actually, he had been an active participant in the deal-making from start to finish. Omnibus spending bill is no betrayal of Trump, Jonah Goldberg, townhall.com, 3/28/18.

A source who was involved in drafting the bill tells me that the White House was in the loop on the negotiations. Trump's legislative affairs director, Marc Short, signed off on the deal -- and seemed to be as surprised as anyone by the veto threat. The president was briefed on the major pieces all along. And let's not forget: Trump agreed to, lobbied for and signed into law the budget framework for the legislation in February.

OK, what’s done is done. Will things really go better in future fiscal cycles, e.g., the budgeting for fiscal year 2019 that is now underway, or will the same problems keep coming up? We believe major improvement is possible, but a serious attitude adjustment would be required.

1. Schedule – Here are some key dates in the federal budget process for fiscal year 2019. Time table of the budget process, House Budget Committee, 2018.

Performance appears to be lagging already, and experience suggests things won’t tend to improve. Congress may or may not agree on a budget resolution by May 15 (let alone April 15), and even if it does the appropriation committees won’t necessarily feel bound by it. House appropriation bills won’t be completed by June 30, and things will probably go slower (thanks to the filibuster rule) in the Senate. Most if not all government units will be funded by continuing resolution well into the new fiscal year, and the CRs may be combined into an omnibus spending bill to be taken up by a lame duck Congress after the mid-term elections. Briefing book, Tax Policy Center, accessed 4/6/18.

The Senate and the House have not always successfully hammered out a single budget resolution. In early 2015, they agreed to a resolution for fiscal 2016—the first time they’d been successful since fiscal 2010. However, in 2016, they again failed to pass a resolution for fiscal 2017.

Agencies that are not funded because their appropriations have not been passed by October 1 are funded under continuing resolutions, which typically cover spending for only part of a year and often limit spending to last year’s level. Recently, it has become more common for no appropriation bills to pass by October 1.

It’s been suggested, however, that the president could pressure Congress into breaking the pattern this year. The first step would to demand early approval of the defense authorizations bill. If the president doesn’t want to sign another bad omnibus bill, he must act now, Rick Manning, dailytorch.com, 4/2/18.

The President has to take the lead in this effort to force Congress to return to regular order on the twelve appropriations bills that should go to his desk between now and Sept. 30. The first step is to demand that he receive the Defense appropriations bill on his desk no later than Memorial Day.

To accomplish this feat and then follow up by pushing the other 11 appropriation bills though the legislative gamut, Mr. Manning suggests, it would be necessary to force Senate critics to conduct actual filibusters by ending the current practice of not taking up bills in the absence of 60 votes for doing so.

The president would need to stay engaged in the process, using the power of the bully pulpit as necessary, to ensure that appropriation bills weren’t being delayed and that the bills being approved satisfied his priorities. “He cannot afford to find himself doing a photo-op in front of ‘big, beautiful walls’ only to discover that funding for those walls has been explicitly prohibited in the funding bill that he is promoting.”

II. Challenges – It’s quite possible that Republicans will lose control of the House in November, and continued control of the Senate is not assured (even though more Democratic than Republican seats will be contested). Out parties have typically done well in mid-term elections, and the GOP has suffered a series of special election defeats in states/districts that the president carried in 2016.

A distinctive element in the current political equation is the investigation by Special Counsel Robert Mueller of possible Russian collusion by the Trump campaign in the 2016 elections or perhaps other misconduct. This investigation began in mid-2016 (Mr. Mueller took it over in May 2017 after the firing of FBI Director James Comey).

The bounds of the investigation are unclear, as is when/how it will be brought to a conclusion. Mueller will navigate uncharted waters when wrapping Russian probe, legal experts say, Lauren Pearle, abcnews.go.com, 4/5/18. If the investigation is still open in November, expect nonstop speculation about the eventual outcome.

One outstanding item on Mueller’s list is to interview the president, subject to whatever ground rules might be negotiated. Some legal experts say the president should agree to such an interview (which he purportedly would welcome), if nothing else because it wouldn’t look good to refuse, while others say he should decline given the legal risks (interview could be conducted as a "perjury trap"). Until this issue is resolved, it’s hard to imagine the investigation being brought to a conclusion. Mueller is said to have told Trump he is not a target, but probe continues, Carol Leonnig & Robert Costa, Washington Post, 4/4/18.

Even without the Mueller investigation, the president would be a controversial figure. Some of his statements and actions have been admirable in our opinion. But there has also been a bumper crop of abrupt policy changes – firings of subordinates (no one’s job seems to be safe for long) - public feuds with journalists and celebrities – erratic tweets. While some Republican candidates are trying to identify their campaigns with the president, others have been keeping their distance.

How should Republicans position themselves for the upcoming elections? One approach would be to tout the recently enacted tax cuts, claim credit for economic improvement (hoping the developing trade confrontation with China won’t spoil the story), and avoid any subjects that might prove controversial. Surprise: GOP voters more “motivated, enthusiastic” than Democrats, Paul Bedard, Washington, 3/21/18.

“Republicans voters are responding favorably to the tremendous results that have come from the historic tax reform bill,” said one [GOP campaign] official. “Midterm elections typically favor our voters,” said another, “so there could be evidence of that in this poll. Also, we've seen an uptick in enthusiasm/support from our base since tax reform passed, because now they have something to be energized about and rally around.” However, nothing should be taken for granted.

Another view is that Republicans are at risk of being overwhelmed by a blue wave of anti-Trump Democrats. Between now and November, therefore, they should strive to energize the party base by notching some conservative wins. Woke GOP must exercise power to have any chance of keeping it, Washington Examiner, 4/5/18.

A bold conservative agenda may help save some GOP seats or some state legislatures by showing that Republicans stand for something and walk the walk rather than just talking the talk. States should pass tax reforms that lower rates and abolish loopholes. They should pass legislation to protect the unborn and to protect the freedom of religion. Beltway Republicans should reverse course and cut federal spending.

Among the ideas being floated are to set up votes on a balanced budget amendment (2/3 approval in both houses of Congress would be required for passage) and making the personal tax cuts in the recent tax bill permanent (also a long shot). GOP plans major votes on tax cuts, balanced budget, welfare reform, Susan Ferrechio, Washington Examiner, 4/8/18.

Actually passing some conservative legislation might be more impressive than such symbolic gestures. A successful effort to get the congressional appropriation bills approved by October 1 would mark a departure from past practice that could be pointed to with pride on the campaign trail. And while the president’s name won’t be on the ballot this year, he could do his reputation some good as well. Why shouldn't the GOP take this project on and try to get it done?

III. Leadership – Politicians are typically prone to support spending increases that will gratify their constituents versus spending cuts. Even if adverse consequences are anticipated from chronic deficits and mounting debt, they can always rationalize that someone else will be in office when the fiscal crisis hits.

The two major parties have somewhat different spending priorities, e.g., Democrats give top billing to social programs while Republicans tend to be more concerned about supporting the military, but there are big spenders on both sides of the aisle.

Given demographic trends that will make senior entitlement programs increasingly costly and rising interest rates that could make interest expense the biggest line item in the budget, this would be a good time to get serious about cutting spending. There are no signs that either party intends to do so, however, and that goes for the president despite his business background and outsider viewpoint. The state of our union is red, Veronique de Rugy, nationalreview.com, 2/1/18.

Does anyone in the Republican party care about spending anymore? I realize I am pretty much talking to myself at this point, but I will continue to try to [convince] people that something needs to give. Until then, one thing is sure: No matter how good people thought the president’s speech was Tuesday night (and it was good on many levels, including the tone and the call for unity), I can tell you that the State of our Union is red and our financial long-term looks bleak.

The Senate filibuster rule fosters fiscal irresponsibility by providing both sides with leverage to pursue their spending priorities. No wonder there is so little support in the Senate for altering the status quo, as the president (and SAFE before him) has repeatedly suggested. Calling for this change in the abstract won't work, the change must be linked to the attainment of a specific, high-priority objective (which for Republicans might be restoring order to the budget process by getting appropriation bills done on time). What about giving the president a line item veto as he requested? Fine, but a constitutional amendment would be required – which couldn’t be easily arranged. Court strikes down line-item veto, Washington Post, 6/26/98.

Unlike earlier laws giving the president discretionary spending authority, "this act gives the president the unilateral power to change the text of duly enacted statutes," Justice John Paul Stevens wrote for the majority. Such line-item vetoes are "the functional equivalent of partial repeals of acts of Congress," he said. But "there is no provision in the Constitution that authorizes the president to enact, to amend or to repeal statutes."

Another procedural option that has been suggested is for the president to propose the claw-back of some of the funds that were authorized in the OAB. A bill along these lines would be filibuster-proof under the Impoundment Control Act of 1974, so Republicans could prevail if they united behind it. Whether they are likely to do this, however, is far from clear. Here’s the spending Trump and the GOP could cut – and Democrats couldn’t stop, Joseph Lawler, Washington Examiner, 4/5/18.

Just because Trump’s budget called for those cuts, though, does not mean that he and congressional Republicans actually want to see them through. In fact, many House and Senate Republicans would likely balk at most of them.

In sum, if the president hopes to change the culture of fiscal irresponsibility in DC he must (1) articulate a compelling reason for change, and (2) make clear that he will push for fiscal responsibility as aggressively as he has pushed his ideas about trade and immigration.

Perhaps the slogan could be making America fiscally safe again.

**********FEEDBACK**********

#I would agree with abolishing the Senate filibuster rule and giving the president a line item veto. – SAFE director

#Filibuster should not be eliminated, that would give the majority party too much power, and a line-item for the president would give one person too much power. I like the impoundment idea, which would force Democrats to defend gratuitous increases to Education and other non-defense spending. – SAFE director

Comment: Not sure what to conclude from absence of feedback on the entry’s suggestion that the GOP should get serious about completing all appropriation bills on a timely basis. Just a minor detail, ho hum, or such an impossible idea that there’s no point talking about it?